The AICPA issued a concept paper on Monday concerning the future of peer review, seeking input on the CPA profession’s practice monitoring of the future. The paper, “Evolving the CPA Profession’s Peer Review Program for the Future,” explains how the current peer review program for firms’ accounting and auditing engagements could be changed into a technology-driven, quasi-real time practice monitoring process.
“Peer review is at the heart of the profession’s commitment to enhancing the quality of accounting and auditing services. It has evolved over the course of 35 years to ably serve the profession and the public,” said AICPA President and CEO Barry C. Melancon, in a statement. “The concept paper, provocative by design, presents a significant leap forward in practice monitoring. It challenges the profession and its stakeholders to imagine a more timely and transparent process that offers insights into quality, in some instances even before an engagement is completed.”
The envisioned concept will develop with feedback from the paper, pilot participants, and as technology evolves. The primary goal of the concept is to increase public protection through enhanced accounting and auditing effectiveness by highlighting potential quality risk indicators and detecting engagement issues earlier, reviewing all firms that perform accounting, auditing and attestation engagements, and monitoring all engagements subject to review.
As it currently stands, the concept would be fueled by five actions:
- Continuous analytical evaluation of engagement performance
- Human review when system-identified concerns are raised
- Involvement of external monitors, when necessary
- Periodic inspection of system integrity
- Oversight of the system’s operating effectiveness
“We believe this visionary concept has the potential to elevate the quality of the profession’s work by using new technological approaches, creating greater transparency and establishing more connection points between the CPA firm, the reviewer and the AICPA,” stated AICPA Senior Vice President, Public Practice & Global Alliances Susan S. Coffey. “I urge all interested parties to join the dialogue to help shape practice monitoring of the future.”
The AICPA envisions the practice monitoring concept being developed and implemented in multiple stages. During the first stage, monitoring tools would be developed and piloted by a select voluntary group of small, medium, and large firms. Throughout the pilot, the Institute would plan on working with pilot firms and peer reviewers to consider how to incorporate the concept’s tools into a stronger interim peer review process.